California Court Confirms that Venue Does Not Require a Nexus Between an "Act of Infringement" and a "Regular and Established Place of Business"

In Genentech, Inc. v. Eli Lilly and Co., 18-cv-1518 JLS (JLB) (S.D. Cal.), the California district court denied Lilly's motion to dismiss for improper venue under the patent venue statute, 28 U.S.C. § 1400(b). Opinion, Sept. 12, 2019. Under the second prong of section 1400(b), venue is proper in any district where the defendant has committed an act of infringement and has a regular and established place of business. There was no dispute that Lilly had a regular and established place of business in the district. After holding that Lilly had committed an act of infringement in the district, the court addressed Lilly's argument that the action should be dismissed because Genentech failed to allege the "required nexus between [the] alleged acts of infringement and the established place of business." Id. at 5. As the court summarized:

According to Defendant, it is not enough that Plaintiff alleges both elements [of section 1400(b)] instead, Plaintiff must allege acts of infringement that are related to the established place of business.

Id. (emphasis in original).

In support, Lilly argued that the underlying policy of the patent venue statue, its legislative history, and two district court decisions supported its position. Id. at 5 (citing Jeffrey Galion, Inc. v. Joy Mfg. Co., 323 F. Supp. 261 (N.D.W. Va. 1971); Scaramucci v. FMC Corp., 258 F. Supp. 598 (W.D. Okla. 1966)).

The court denied Lilly's motion, noting that "the plain language of section 1400(b) contains no nexus requirement," id. at 6, and "[t]he vast majority of courts that have addressed the issue . . . have declined to read into the statute any nexus requirement." Id. at 5-6 (citing Seven Networks v. Google LLC, 315 F. Supp. 3d 933, 942 (E.D. Tex. 2018) ("This Court therefore rejects [the] proposition that [§ 1400(b)] requires that alleged acts of infringement by the Defendant pled to meet the requirements of § 1400(b) must be ‘tied to or related to' the regular and established place of business of the Defendant."); Plexxikon Inc. v. Novartis Pharm. Corp., No. 17-CV-04405-HSG, 2017 WL 6389674, at *2 (N.D. Cal. Dec. 7, 2017) ('The Court . . . concludes that the plain language of the statute does not include a nexus requirement.'); Am. Can Co. v. Crown Cork & Seal Co., 433 F. Supp. 333, 336 (E.D. Wis. 1977) ("[Section 1400(b)] requires only that the defendant have committed acts of infringement in the district and have a regular and established place of business there; there is no requirement that the two factors be related.")).

One might think that the court's decision was a forgone conclusion, but the dispute indicates that plaintiffs may still face similar motions challenging venue.